The search on me turned up nothing but the AO still made additions for an old year. Can he?
Where the assessment for a year stood completed before the search and nothing was pending to abate, an order under s.153A cannot simply reopen it. A completed assessment can be reassessed under s.153A only on incriminating material found in the search having some nexus to undisclosed income - and the Court left that route open, upholding a remand to the Assessing Officer to reassess if such material exists.
Decided by the High Court (Patna High Court - K. Vinod Chandran, CJ. and Partha Sarthy, J. (judgment by Vinod Chandran, CJ.), Miscellaneous Appeal No. 823 of 2017) on 2023-07-21, reported as [2024] 460 ITR 480 / [2023] 156 taxmann.com 547 (Pat.)(HC); Miscellaneous Appeal No. 823 of 2017. It bears on section 153A, section 132(1), section 263, section 143(3) of the Income Tax Act 1961, in Search, Survey & Block Assessment and Assessment & Scrutiny matters.
This is the Patna High Court, so it binds in Bihar - and it brings the Kabul Chawla line, as approved by the Supreme Court in Abhisar Buildwell, squarely into a state where practitioners previously had to argue from Delhi authority alone. It also disposes of a specific revenue argument you will meet: that a s.263 remand keeps a completed assessment open for s.153A even when the search draws a blank. The Court's answer is that the Department's remedy then lies in ss.147/148 on their own conditions.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee's assessment for assessment year 2002-03 was completed under s.143(3) on 6 June 2003. The Commissioner set that order aside in revision under s.263 on 24 November 2004 and remanded for a fresh assessment. A search under s.132(1) followed on 15 December 2004, and proceedings under s.153A were initiated on its strength. The assessee told the Assessing Officer that no assessment was pending on the date of search or of initiation for anything to abate. The Assessing Officer rejected that, precisely because of the Commissioner's remand, treated the remanded proceeding as abated, and passed an order under s.153A read with s.143(3) on 29 December 2006. Meanwhile the assessee had appealed against the s.263 remand, and on 28 April 2006 - before the s.153A order was passed - the Tribunal set the remand aside and revived the original assessment order of 6 June 2003. The assessee's appeal against the s.153A order failed before the first appellate authority. The Tribunal then reversed, holding that the assessment stood completed on the date the s.153A proceedings were initiated so there was nothing pending to abate. The department appealed to the High Court.
The department's appeal was rejected and the question answered in favour of the assessee. Where an assessment for one of the six years is pending on the date the s.153A proceedings are initiated, it abates and the Assessing Officer makes a fresh assessment in which he may reckon both disclosed and undisclosed income. Completed assessments do not abate, and to reassess one of them there must be incriminating material disclosed in the search bearing some relevance or nexus to the allegation of undisclosed income. Here the assessment for 2002-03 stood completed on 6 June 2003, long before the search, and the second proviso to s.153A had nothing to bite on, because the s.263 remand which the Assessing Officer relied on had itself been set aside by the Tribunal before the s.153A order was made. The Court did not shut the door on reassessment: it held that the Tribunal was within the statutory framework in remanding to the Assessing Officer to carry out a reassessment for 2002-03 if some incriminating material seized during the search is available. So the outcome is that the s.153A assessment as made was bad, and the question whether there is incriminating material goes back to the Assessing Officer.
The Court took the framework from the summary of the legal position in CIT v. Kabul Chawla, which it set out, and from its affirmance by the Supreme Court in Pr. CIT v. Abhisar Buildwell. On that summary, notice under s.153A must issue for the six preceding years once a search takes place; assessments and reassessments pending on the date of the search abate and are recomputed afresh with disclosed and undisclosed income together; but a completed assessment can be interfered with under s.153A only on the basis of incriminating material unearthed in the search or requisition, or undisclosed income or property discovered in it which was not produced or already disclosed in the original assessment. Applying that, the Court asked simply whether anything was pending on the date the s.153A proceedings were initiated. The Assessing Officer had thought the s.263 remand kept a proceeding alive, but the Tribunal had set that remand aside on 28 April 2006 and revived the original assessment of 6 June 2003, and it did so before the s.153A order of 29 December 2006 was passed. There was therefore nothing to abate under the second proviso, and the Tribunal had been right to say so and right to leave reassessment open if search material supported it. The Court concluded by bowing to the proposition declared by the Delhi High Court and affirmed by the Supreme Court.
Insofar as completed assessment, they do not abate and for the purpose of re-assessing, there should be some incriminating material disclosed in the search, which alone can lead to re-opening of the proceedings on the basis of the seized material, which has some relevance or nexus to the allegation of undisclosed income.
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Handle my notice → Ask a CA on WhatsAppWhere the assessment for a year stood completed before the search and nothing was pending to abate, an order under s.153A cannot simply reopen it. A completed assessment can be reassessed under s.153A only on incriminating material found in the search having some nexus to undisclosed income - and the Court left that route open, upholding a remand to the Assessing Officer to reassess if such material exists. This was decided by the High Court (Patna High Court - K. Vinod Chandran, CJ. and Partha Sarthy, J. (judgment by Vinod Chandran, CJ.), Miscellaneous Appeal No. 823 of 2017) and bears on section 153A, section 132(1), section 263, section 143(3) of the Income Tax Act 1961. It is reported as [2024] 460 ITR 480 / [2023] 156 taxmann.com 547 (Pat.)(HC); Miscellaneous Appeal No. 823 of 2017. This is the Patna High Court, so it binds in Bihar - and it brings the Kabul Chawla line, as approved by the Supreme Court in Abhisar Buildwell, squarely into a state where practitioners previously had to argue from Delhi authority alone. It also disposes of a specific revenue argument you will meet: that a s.263 remand keeps a completed assessment open for s.153A even when the search draws a blank. The Court's answer is that the Department's remedy then lies in ss.147/148 on their own conditions. If it applies to you, the first step is this: Ask in writing for the list of seized material and require the officer to identify which document is said to be incriminating for the specific year under addition.
The assessee's assessment for assessment year 2002-03 was completed under s.143(3) on 6 June 2003. The Commissioner set that order aside in revision under s.263 on 24 November 2004 and remanded for a fresh assessment. A search under s.132(1) followed on 15 December 2004, and proceedings under s.153A were initiated on its strength. The assessee told the Assessing Officer that no assessment was pending on the date of search or of initiation for anything to abate. The Assessing Officer rejected that, precisely because of the Commissioner's remand, treated the remanded proceeding as abated, and passed an order under s.153A read with s.143(3) on 29 December 2006. Meanwhile the assessee had appealed against the s.263 remand, and on 28 April 2006 - before the s.153A order was passed - the Tribunal set the remand aside and revived the original assessment order of 6 June 2003. The assessee's appeal against the s.153A order failed before the first appellate authority. The Tribunal then reversed, holding that the assessment stood completed on the date the s.153A proceedings were initiated so there was nothing pending to abate. The department appealed to the High Court. The matter was decided on 2023-07-21 by the High Court (Patna High Court - K. Vinod Chandran, CJ. and Partha Sarthy, J. (judgment by Vinod Chandran, CJ.), Miscellaneous Appeal No. 823 of 2017). On those facts the High Court held as follows. The department's appeal was rejected and the question answered in favour of the assessee. Where an assessment for one of the six years is pending on the date the s.153A proceedings are initiated, it abates and the Assessing Officer makes a fresh assessment in which he may reckon both disclosed and undisclosed income. Completed assessments do not abate, and to reassess one of them there must be incriminating material disclosed in the search bearing some relevance or nexus to the allegation of undisclosed income. Here the assessment for 2002-03 stood completed on 6 June 2003, long before the search, and the second proviso to s.153A had nothing to bite on, because the s.263 remand which the Assessing Officer relied on had itself been set aside by the Tribunal before the s.153A order was made. The Court did not shut the door on reassessment: it held that the Tribunal was within the statutory framework in remanding to the Assessing Officer to carry out a reassessment for 2002-03 if some incriminating material seized during the search is available. So the outcome is that the s.153A assessment as made was bad, and the question whether there is incriminating material goes back to the Assessing Officer.
The Court took the framework from the summary of the legal position in CIT v. Kabul Chawla, which it set out, and from its affirmance by the Supreme Court in Pr. CIT v. Abhisar Buildwell. On that summary, notice under s.153A must issue for the six preceding years once a search takes place; assessments and reassessments pending on the date of the search abate and are recomputed afresh with disclosed and undisclosed income together; but a completed assessment can be interfered with under s.153A only on the basis of incriminating material unearthed in the search or requisition, or undisclosed income or property discovered in it which was not produced or already disclosed in the original assessment. Applying that, the Court asked simply whether anything was pending on the date the s.153A proceedings were initiated. The Assessing Officer had thought the s.263 remand kept a proceeding alive, but the Tribunal had set that remand aside on 28 April 2006 and revived the original assessment of 6 June 2003, and it did so before the s.153A order of 29 December 2006 was passed. There was therefore nothing to abate under the second proviso, and the Tribunal had been right to say so and right to leave reassessment open if search material supported it. The Court concluded by bowing to the proposition declared by the Delhi High Court and affirmed by the Supreme Court. In the words reproduced by the source cited on this page: "Insofar as completed assessment, they do not abate and for the purpose of re-assessing, there should be some incriminating material disclosed in the search, which alone can lead to re-opening of the proceedings on the basis of the seized material, which has some relevance or nexus to the allegation of undisclosed income." The decision followed or applied CIT v. Kabul Chawla [2015] 61 taxmann.com 412 / 234 Taxman 300 / [2016] 380 ITR 573 (Delhi) - the summary of the legal position reproduced (paras 6, 8); Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 / 293 Taxman 141 / 454 ITR 212 (SC) - which affirmed Kabul Chawla (paras 6, 8).
It was decided by the High Court on 2023-07-21 and is reported as [2024] 460 ITR 480 / [2023] 156 taxmann.com 547 (Pat.)(HC); Miscellaneous Appeal No. 823 of 2017. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 153A, section 132(1), section 263, section 143(3), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The department's appeal was rejected and the question answered in favour of the assessee. Where an assessment for one of the six years is pending on the date the s.153A proceedings are initiated, it abates and the Assessing Officer makes a fresh assessment in which he may reckon both disclosed and undisclosed income. Completed assessments do not abate, and to reassess one of them there must be incriminating material disclosed in the search bearing some relevance or nexus to the allegation of undisclosed income. Here the assessment for 2002-03 stood completed on 6 June 2003, long before the search, and the second proviso to s.153A had nothing to bite on, because the s.263 remand which the Assessing Officer relied on had itself been set aside by the Tribunal before the s.153A order was made. The Court did not shut the door on reassessment: it held that the Tribunal was within the statutory framework in remanding to the Assessing Officer to carry out a reassessment for 2002-03 if some incriminating material seized during the search is available. So the outcome is that the s.153A assessment as made was bad, and the question whether there is incriminating material goes back to the Assessing Officer. It arises in Search, Survey & Block Assessment and Assessment & Scrutiny matters, on section 153A, section 132(1), section 263, section 143(3) of the Income Tax Act 1961, and was decided by Patna High Court - K. Vinod Chandran, CJ. and Partha Sarthy, J. (judgment by Vinod Chandran, CJ.), Miscellaneous Appeal No. 823 of 2017. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Establish that the year was unabated by showing no proceeding was pending on the date of search. Where the year had earlier been remanded under s.263, argue that the remand does not supply s.153A jurisdiction in the absence of search material. Take the jurisdictional point before arguing the merits of the addition.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision applying, following or affirming this judgment was found: the report carries no later-treatment banner and a search of the database returned nothing citing it. What it applies, however, is not in doubt - the rule comes from CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi) as affirmed by the Supreme Court in Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 454 ITR 212 (SC), which binds. Nothing doubting this decision was found either, but absence of contrary authority is not the same as later approval. Date scope: by the closing limb of s.153A(1) that section reaches only a search initiated, or a requisition made, after 31 May 2003 and on or before 31 March 2021, and s.153C is excluded by its own sub-section (3) from any search initiated on or after 1 April 2021, so this entry is authority on the s.153A and s.153C regime and on nothing else — a search initiated between 1 April 2021 and 31 August 2024 is a reassessment under ss.147 to 151 as they stood immediately before the Finance (No. 2) Act 2024, by force of s.152(3), and a search initiated on or after 1 September 2024 falls under the substituted Chapter XIV-B. The incriminating-material requirement worked out in this line rests on the words of s.153A and s.153C, which spoke only of assessing or reassessing total income and carried no material limb of their own; s.158BB(2) of the substituted Chapter has its own and considerably wider undisclosed-income limb, and whether the same requirement holds under it has not been decided, so the point should not be assumed either way for a block assessment. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment has now been read in full in a law report, and several identifiers change. It is dated 21 July 2023, not 18 September 2023; the appeal is Miscellaneous Appeal No. 823 of 2017; and it is reported at [2024] 460 ITR 480 and [2023] 156 taxmann.com 547, so the news-service citation is no longer the only reference. The sequence of events is what decides the case and the entry did not have it: the original assessment was completed on 6 June 2003, the Commissioner set it aside under s.263 on 24 November 2004, the search took place on 15 December 2004, the Tribunal set the s.263 remand aside on 28 April 2006 and revived the original assessment, and only then, on 29 December 2006, did the Assessing Officer pass the s.153A order. Because the remand had gone, nothing was pending to abate. The sentence previously quoted was the headline of a tax news report and not the Court's words. One further point matters for anyone relying on this: the Court did not hold that the year was closed for good. It upheld the Tribunal's remand directing the Assessing Officer to reassess for 2002-03 if incriminating material seized in the search is available. The Court did not decide whether any incriminating material existed - that went back to the Assessing Officer - so the case does not tell you what will count as material with the required nexus. It does not address what happens where a s.263 remand is still alive on the date of the search, which is the situation the Assessing Officer thought he was in. And it says nothing about the position where the completed assessment was an intimation under s.143(1) rather than an order under s.143(3). This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The department's appeal was rejected and the question answered in favour of the assessee. Where an assessment for one of the six years is pending on the date the s.153A proceedings are initiated, it abates and the Assessing Officer makes a fresh assessment in which he may reckon both disclosed and undisclosed income. Completed assessments do not abate, and to reassess one of them there must be incriminating material disclosed in the search bearing some relevance or nexus to the allegation of undisclosed income. Here the assessment for 2002-03 stood completed on 6 June 2003, long before the search, and the second proviso to s.153A had nothing to bite on, because the s.263 remand which the Assessing Officer relied on had itself been set aside by the Tribunal before the s.153A order was made. The Court did not shut the door on reassessment: it held that the Tribunal was within the statutory framework in remanding to the Assessing Officer to carry out a reassessment for 2002-03 if some incriminating material seized during the search is available. So the outcome is that the s.153A assessment as made was bad, and the question whether there is incriminating material goes back to the Assessing Officer.
TaxSphere, “ACIT v Satish Kumar Keshri”, https://taxnotice.vittsphere.com/caselaw/case/acit-v-satish-kumar-keshri-153a/ (validity last checked 2026-08-19)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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